Why Aussie Media Bosses Are Filthy With Netflix And Facebook

Newsroom

Posted on October 24, 2016

The Seven Network and Fairfax Media have made an urgent appeal to the federal government to overhaul media regulations so they can claw back advertising dollars lost to foreign online giants and plough it back into local content.

Seven boss Tim Worner and Fairfax chief executive Greg Hywood complained to a Senate committee examining media reform that Netflix, Facebook and Google were eating into the local advertising market, and restricting the ability of local players to invest in quality journalism and TV shows.

Mr Worner demanded the government broaden its planned media ownership reforms to include another cut to free-to-air TV licence fees, which he said were the highest in the world.

Australia's TV industry was "in peril", he said, because hefty licence fees were limiting how much broadcasters could invest in local TV shows.

Netflix spent nearly $US5 billion ($A6.6 billion) on original programming last year - twice as much as the entire Australian TV market - but isn't bound by local regulations.

"We want to be able to invest in Australian production. It's going to become more and more important as our viewing landscape changes and at the moment we can't do it," Mr Worner said.

"If you look at what Australians like to watch, they like to watch Australian programs, so we are going to have to do that to remain relevant and remain a vital part of the Australian community."

The government wants to dump two media rules created in the pre-internet era, including one that prevents a company controlling commercial TV licences that reach more than 75 per cent of the population.

The other key plank is scrapping the two-out-of-three rule preventing a proprietor from controlling more than two of three radio, TV and newspapers in one area.

Mr Worner said the planned reforms would only help one or two local players and wholesale changes were needed to benefit the entire industry.

On top of the ownership reforms, the government announced in the May budget plans to cut the TV licence fee by 25 per cent to help ease the pressure on free-to-air broadcasters.

However, Seven, Nine and Ten all complained it wasn't enough.

For Fairfax, owner of The Age and Sydney Morning Herald, the key to its future is the abolition of the two-out-of-three ownership rule so local players can explore potential mergers.

Such a move would create a level playing field with foreign players and allow Australian media companies to snatch back ad revenue, Mr Hywood said.

"That doesn't mean necessarily that free-to-air and Fairfax get together but it does provide that option," he said.

Mr Hywood said Fairfax had already cut hundreds of millions of dollars of costs in response to falling ad revenues.

"The more restricted the levels of revenues we've got, the less the incentive there is to invest," he said.